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Geithner Won't Let Us Default  
User currently offlineKen777 From United States of America, joined Mar 2004, 8433 posts, RR: 9
Posted (3 years 10 months 1 week 5 days 22 hours ago) and read 1417 times:

A rather interesting article, giving a glimpse of what might happen it the debt ceiling isn't raised.

Quote:
America reached two dubious milestones in recent weeks.

Our national debt, including Social Security obligations, has run up to nearly $14 trillion. That's a lot of money, even in Washington.

And our Treasury Secretary started using the d-word. Writing to congressional leaders, Timothy Geithner warned that failing to increase America's debt ceiling, currently $14.3 trillion, "would precipitate a default by the United States."

Geithner does have some options to cover cash flow while politicians argue, but in the end there is a list of politically explosive payments that might not be paid due to lack of funding. Social Security payments and payments to military personnel are the most explosive, with payments for medical care following right behind.

This might be interesting to follow if it can be played out without causing damage to the country, or to Americans. Would give the Tea Party a chance to demonstrate just how effective their approach to government really is, and the GOP the opportunity to show if they have returned to the days of responsible management.

11 replies: All unread, jump to last
 
User currently offlinedfwrevolution From United States of America, joined Jan 2010, 997 posts, RR: 51
Reply 1, posted (3 years 10 months 1 week 5 days 19 hours ago) and read 1383 times:

Quoting Ken777 (Thread starter):
Geithner does have some options to cover cash flow while politicians argue, but in the end there is a list of politically explosive payments that might not be paid due to lack of funding. Social Security payments and payments to military personnel are the most explosive, with payments for medical care following right behind.

All of which are vastly preferred to defaulting, which let's face it, will not be allowed to happen.

Quoting Ken777 (Thread starter):
This might be interesting to follow if it can be played out without causing damage to the country, or to Americans. Would give the Tea Party a chance to demonstrate just how effective their approach to government really is, and the GOP the opportunity to show if they have returned to the days of responsible management.

If the finances of the U.S. government are going to be called "responsible" again, then we need a complete overhaul of the revenue arm and the spending arm. Unfortunately, there are entrenched camps everywhere you turn standing in the way. They will be judged "effective" based on whether or not they storm your particular castle.


User currently offlinewingman From Seychelles, joined May 1999, 2315 posts, RR: 5
Reply 2, posted (3 years 10 months 1 week 5 days 19 hours ago) and read 1360 times:

Well, if we are going to default I say we do it while Hu is eating his dinner tonight. Talk about a wicked response to China's unveiling of fighters and UAVs at the most inopportune times.

User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 3, posted (3 years 10 months 1 week 5 days 18 hours ago) and read 1345 times:

Quoting Ken777 (Thread starter):
This might be interesting to follow if it can be played out without causing damage to the country, or to Americans. Would give the Tea Party a chance to demonstrate just how effective their approach to government really is, and the GOP the opportunity to show if they have returned to the days of responsible management.

I hope so. I found it funny that Schumer is irate Christie has halted the tunnel project between NY and NJ only because NJ is totally broke and can't pay for it. I mean what doesn't he understand we have to stop spending till we begin to catch up to the debt or in 10 years we are really screwed.


User currently offlineKen777 From United States of America, joined Mar 2004, 8433 posts, RR: 9
Reply 4, posted (3 years 10 months 1 week 5 days 17 hours ago) and read 1309 times:

Quoting NIKV69 (Reply 3):
I found it funny that Schumer is irate Christie has halted the tunnel project between NY and NJ only because NJ is totally broke and can't pay for it. I mean what doesn't he understand we have to stop spending till we begin to catch up to the debt or in 10 years we are really screwed.

I tend to look at spending as being either "current" and "long term".

Current spending is for current expenses, like salaries and utility bills. Long term are investments that are anticipated to last a long time, like long term mortgages that individuals use to buy a house.

Until we break down the long term spending and match it to long term assets the voting public will not be ready to invest in the future.

The tunnel project is one of those long term investments. Great (short term) political move to cancel it, but the voters don't know the long term benefits of the investment, or the long term costs (missed benefits) of not investing.


User currently offlinedfwrevolution From United States of America, joined Jan 2010, 997 posts, RR: 51
Reply 5, posted (3 years 10 months 1 week 5 days 16 hours ago) and read 1290 times:

Quoting Ken777 (Reply 4):
Long term are investments that are anticipated to last a long time, like long term mortgages that individuals use to buy a house.

Do you recommend that someone go buy a house when they can't pay their current bills? Maybe it would be prudent to delay the house while you get your spending or income in check? The opportunity to buy a house will still exist in the future.


User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 6, posted (3 years 10 months 1 week 5 days 16 hours ago) and read 1288 times:

Quoting Ken777 (Reply 4):
The tunnel project is one of those long term investments. Great (short term) political move to cancel it, but the voters don't know the long term benefits of the investment, or the long term costs (missed benefits) of not investing.

Hence how we got here in so much debt. Fact is no matter what the chance of it being a good investment Christie looked at the fact his state is broke and education worst ever. Certain things have to take priority and getting back to some fiscal sense and better teachers while throwing the bums out skating on tenure is more important than risking a huge cost overrun on a project that is too unpredictable right now.


User currently offlineFlighty From United States of America, joined Apr 2007, 8709 posts, RR: 3
Reply 7, posted (3 years 10 months 1 week 5 days 15 hours ago) and read 1263 times:

The best solution would be reducing the payments people think they are entitled to, so a higher debt is not necessary.

And, restructure health care costs to reduce costs to something that is affordable (i.e., paid for by the generation receiving the care). There is no reason grandchildren should pay 10 years' wages on their grandparent's medical bills. The millions of millionaires over age 50 should be paying for elder care; the money should not be borrowed from China. Suddenly, you would see far cheaper and smarter care.


User currently offlinedfwrevolution From United States of America, joined Jan 2010, 997 posts, RR: 51
Reply 8, posted (3 years 10 months 1 week 5 days 14 hours ago) and read 1238 times:

Quoting Flighty (Reply 7):
The best solution would be reducing the payments people think they are entitled to, so a higher debt is not necessary.

And, restructure health care costs to reduce costs to something that is affordable (i.e., paid for by the generation receiving the care).

The long-term solution to both problems is to move from defined benefit to defined contribution welfare programs. There are innumerable benefits to having individuals save and invest for their own retirement and healthcare costs rather than relying on a national Ponzi scheme with a shrinking dependency ratio.

This is one of the most pressing issues facing the U.S. economy as the unfunded entitlement liabilities are estimated at $40 trillion through 2037. President Bush suggested the correct medicine in 2005, but the left ran a hatchet job claiming that individual accounts amount to gambling retirement savings on the stock market.

Here we are six years later: the problem has only gotten worse, and the solution will still be the same.  


User currently offlineKen777 From United States of America, joined Mar 2004, 8433 posts, RR: 9
Reply 9, posted (3 years 10 months 1 week 5 days 13 hours ago) and read 1202 times:

Quoting dfwrevolution (Reply 5):
Do you recommend that someone go buy a house when they can't pay their current bills?

If you can buy a house at a reduced price (because of the housing crisis) and have a net reduction in what you are paying monthly for rent then it might be a good buy. Especially with the interest and property tax deductions available.

Quoting dfwrevolution (Reply 5):
Maybe it would be prudent to delay the house while you get your spending or income in check?

My feeling is that you remember what assets increase in value and which ones depreciate. We have a lot of major capital projects in this country that have served us well over many years and would be exceptionally difficult to replace today.

We also need to look realistically at some of our political costs. The Iraq War FUBAR is certainly one that will have major long term costs. We really need to avoid the horribly stupid decisions like that. But we do need to stand behind the vets who served - even if it means support for the next 60 to 70 years.


User currently offlinedfwrevolution From United States of America, joined Jan 2010, 997 posts, RR: 51
Reply 10, posted (3 years 10 months 1 week 5 days 13 hours ago) and read 1190 times:

Quoting Ken777 (Reply 9):
If you can buy a house at a reduced price (because of the housing crisis) and have a net reduction in what you are paying monthly for rent then it might be a good buy.

But are there any undervalued transportation tunnels available because of the tunneling crisis? Do you see where I'm going with this?

Remove your conditionals and the answer is a flat: NO, you should not buy a house you cannot afford even if it makes for a good investment. Neither should we go buying tunnels we can't afford today even if it makes a positive investment in the future. We can build it when public finances are not a mess. Building it now won't help fix the situation any faster.

Quoting Ken777 (Reply 9):
My feeling is that you remember what assets increase in value and which ones depreciate. We have a lot of major capital projects in this country that have served us well over many years and would be exceptionally difficult to replace today.

That's not an answer to my question...


User currently offlineFlighty From United States of America, joined Apr 2007, 8709 posts, RR: 3
Reply 11, posted (3 years 10 months 1 week 5 days 13 hours ago) and read 1181 times:

Quoting Ken777 (Reply 9):
My feeling is that you remember what assets increase in value and which ones depreciate.

The human bodies of a generation depreciate over time. We can invest in them, but...

Quoting Ken777 (Reply 9):
But we do need to stand behind the vets who served - even if it means support for the next 60 to 70 years.

Yes... but... we have to divide a smaller pie fairly. If we refuse, then who knows.


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